...of its expected cash flows.? Which of the following would lower the calculated value:
a.The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for only 5 rather than 10 years, hence that each payment is for $20,000 rather than for $10,000.
b.The discount rate increases.
c.The riskiness of the investment’s cash flows decreases.
d.The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years.
a.The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for only 5 rather than 10 years, hence that each payment is for $20,000 rather than for $10,000.
b.The discount rate increases.
c.The riskiness of the investment’s cash flows decreases.
d.The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years.